Rescission Q&A: 74% of responders either Rescinded or are thinking about it

Mar 9, 2015

See this poll on: https://livinglies.me/2015/03/05/did-you-rescind/

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The numbers keep changing but it is clear that rescission is looming on the horizon for people who (1) are or were in foreclosure after rescission was sent or (2) are currently contemplating sending the rescission notice now.

One thing I don’t think I made clear is that it is NOT my opinion that a rescission notice can be sent out under any legal theory if the foreclosure auction already occurred. That is because, in my opinion, there is nothing left to rescind. The sale eliminates the mortgage and the note. And there is an arguable point that a foreclosure judgment might do the same thing. Although I am encouraging people to consider rescission with a knowledgeable attorney who is licensed in the jurisdiction in which the property is located, I am not encouraging people to do so if the auction sale has already occurred. After judgment is entered, it is a toss-up — I can see both sides of the argument. The key question is whether the note and mortgage still legally exist.

Answering some recent questions that I did not get to on The Neil Garfield Show, I offer the following — with admonition that most lawyers are NOT familiar with the TILA rescission process but that proceeding without legal advice is not a good idea. There are potential risks if the banks or servicers file the action required within 20 days of rescission. While I think the likelihood is low of the banks and servicers filing that action within 20 days of rescission, if they do it there could be consequences to anyone gaming the system the same way the banks and servicers are doing now with their legal presumptions and motions. And be aware that few judges are going to like this strategy even if it is rubber stamped by the US Supreme Court unanimously one month ago. My primary argument is that the judge has no discretion if the bank or servicer failed to file within the 20 days regardless of how meritorious their action would have been as to the statute of limitations, the adequacy of disclosures, who was the lender etc.

Q&A:

Q: My loan was supposedly closed end of 2009. Case was dismissed but Quicken Loans refiled on 12/2014. I have an attorney. Can one rescind this long after the supposed closing and during the process of foreclosure? Thank you. A: Yes if disclosures that are “material” have continued to be withheld from you. No if you knew or should have known the facts for more than 3 years. Maybe if there are ambiguities because if the the “lender” fails to file the action within 20 days, they probably will be deemed to have waived their right to contest the rescission.
I would like to send a letter to rescind, does anyone have a template they can email me to make sure I do it right freedomlumber@aol.com we have been fighting BOA or about 2-3 years now but our original loan was with countrywide which never notified us of the change and BOA never did the proper transfer with the Register of Deeds in NC until they started the foreclosure proceedings. A: There is no template. Send a letter referring to your “loan” and simply say you hereby rescind it. The failure to notify you of a change from bank to another after the alleged loan closing is NOT a basis for rescission according to what I understand. But considering it is Countrywide, that was an aggregator not a lender. It was not a depository institution and the only way they could have “funded” the loan was as a conduit. Hence the disclosure papers revealed a debt to Countrywide when the the lender was likely another entity or group. That is a two edged sword though. If Countrywide didn’t make the loan there probably was no loan contract so there is nothing to rescind — but there also is nothing to enforce if there was no loan contract. If the circumstances are deemed to be a material wrongful disclosure as to the money (that you owe the principal to the party on the note and mortgage) then there are grounds to send the rescission.
Sent Country Wide a rescission back in 09, of course it was rejected. The home was lost to a short sale to Ocwen in 2013. Your thoughts on any action for damages or other. A: Your rescission notice was not rejected no matter what they said. It was acknowledged so you have no problem with proving delivery of the notice. By operation of law the mortgage and note were nullified according to the statute and Reg Z. That means that legally there was no mortgage and there was no note and money was owed to you. The statute of limitations might have run on your claim for damages but the foreclosure proceedings after the rescission were void because there was no mortgage and no note to enforce. My opinion is it sounds like you might be able get that home back — especially since the short sale occurred in 2013. BUT if you signed their papers you might have inadvertently withdrawn your notice of rescission. My position on that is that rescission is effective by operation of law and neither you nor the pretender lender can do anything about the nullification of the mortgage and note without further “operation of law” which means a court order.
What good would it do to send a rescission letter now since having allegedly closed the loan in 2005? A: Possibly none IF state law takes presidence AND state law has a statute of limitations relating to title and damage actions based upon wrongful foreclosure. Check with licensed attorney about the statutes of limitations and the doctrine of equitable tolling which extends the statute of limitations.
Rescinded during foreclosure by rescission letters to lender, servicer, MERS, & Chase on first and second refi mortgages in June, 2007. Got acknowledgement with rescission letter being forwarded to new servicer, EMC (for Chase). Still in house 8 years later. Have not paid since 2006. Thru 4 judges local court will not recognize rescission but have high hopes now that mortgage and note are void (since 2007). Servicer says I owe $550,000 on a $65,000 second mortgage which was the only new money, if that. Chase claims, long after 20 day period, that my TILA complaint was bogus. Am having trouble with my Brydges and Oh and Assoc. attorneys understanding SCOTUS ruling re 20 day window. A: The Judge doesn’t have discretion in my opinion. The 20 days have elapsed. I know judges hate this but the Supreme Court basically slapped down hundreds of trial and appellate judges for their “legislation from the bench.” Sounds like a notice of filing, suggestion of dismissal and/or motion to dismiss based upon mootness — the mortgage and note no longer exist because TILA says they don’t exist “by operation of law.” If lawyer doesn’t like it find someone else who does. But listen to legal advice even from the lawyer you don’t like. They might suggest things that would change your decision and whatever they say takes precedence over anything I write here for general information.
I sent and recorded Rescission letter in 2012 based on fraud and nondisclosure. They ignored it totally until now. They brought it up in another matter in court as they are trying to get more money from me. I have 2 weeks to respond. I don’t know where to go now for help. A: If they ignored it then they ignored the law and should not be rewarded for it. I think Justice Scalia was saying quite clearly that there is no room for discretion on this issue. If the rescission was sent then the mortgage and note are over and gone until a court order says otherwise; but the court has no discretion to entertain a defense to rescission if it isn’t filed in court seeking a declaration within 20 days after rescission. So based upon my analysis a notice of filing and a suggestion of mootness should be filed because the mortgage and note no longer exist. I think a motion to dissolve lis pendens would probably also be appropriate and a demand that the pretender lender return the canceled note and file the satisfaction of mortgage together with return of all money paid starting from “origination” of the loan. You might want to take this to Federal court where they are more likely to enforce clear announcement by a unanimous Supreme Court. Get advice from competent licensed legal professional — and make sure they have done the research on TILA rescission and that they essentially ignore any rulings prior to SCOTUS saying the borrower does not file a lawsuit to effect rescission and the borrower does not tender money or property to effect the rescission. The burden is entirely on the pretender lender in TILA which is a remedial statute designed to cause the Banks pain if they screw around with lending laws.